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The market continues to churn along on earnings and economic news. How long can it continue? No one knows for sure, but 1525 in the S&P doesn't look like too much of a hurdle at this point. The non farm payrolls suggestion was right on target, here is an excerpt from our website blog post:
"So what are markets telling us? We ran up to 1515 and now we're down to 1495 roughly. The market expects roughly 170-180k jobs in the report and the unemployment rate is expected to fall to 7.7 from 7.8%. Jobless claims over the last several weeks have fallen to a low of 330,000. So, was January a big hiring month?
It may not matter since these "big" economic reports allow funds to really make a large number of trades without affecting the market too much. With that said, will funds flow into or out of the stock market?
If the number comes in between 100k and 180k, the markets should rally. The only way the market sells-off is if the number comes in less than 80,000. You might some down side activity, but then again, it may be considered a "buying" opportunity by many.
Our bet is 130,000. Less than forecast but not below 100,000."
The non-farm payrolls came in at 150k, above our expectations, and the market rallied. We don't always get it right, but for the most part, the calls we have are directly related to our strategy's direction.
The last two weeks have seen a market that moved between 1515 and 1490 with both lines holding very strong.
Can we expect more upside? What about a pull back. Insurance is pretty cheap in the form of S&P PUT Options at this point, but they can always get cheaper if the market continues to climb.
Our recommendations (based on our current strategy) is to remain long until this market gives a clearer signal. Though treasuries have moved a little to the upside, they are clearly still in a sell-off state, and until rates start moving higher (to warrant some investment in them other than safety) we may continue to get a little more length out of this rally.
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